•Fast-expanding agricultural and industrial production and exports, coupled with a low savings rate due to the lack of confidence in the nation’s banking system, contributed to strong domestic consumption growth and further decline of unemployment. However, the Argentine economy, complicated by high inflation and an uncertain global economic outlook, is forecast to see a more moderate growth of 3.5% in 2012, compared to 8.7% estimated for 2011.
•Hong Kong’s total exports to Argentina soared by 35% to US$462 million in the first eleven months of 2011, while its imports from Argentina rose by 5% to US$291 million.
Current Economic Situation
High international food prices and a revival of exports of industrial manufactures, vehicles and transport equipment led the Argentine economy to achieve impressive growth of 9.2% and 8.7% (estimated) in 2010 and 2011, respectively. While unemployment was edging down and domestic consumption continued to grow with rising wages, both consumers and investors still felt uncertain about the nation’s banking system, making the return of durable consumption and foreign investment relatively slow.
Looking forward, the Argentine economy is expected to slow in entering 2012. Moderating food and commodity prices in line with the cloudy global economic scenario will hinder industrial activities and the demand for commodities, while investment may gather steam as political uncertainty is cleared after presidential election, though the recent control on repatriating direct investment can be a deterrent to foreign capital. On the other hand, private consumption growth, on the back of a low savings rate and rising wages, will continue to boost the economy, though high inflation can eat into pay rises. Externally, the trade balance will likely improve following the recently imposed import restrictions, not to mention the growing speculation about currency depreciation. Taken together, the Argentine economy is forecast to expand by a more moderate rate of 3.5% in 2012.
According to Argentina’s Customs Code, importers and exporters must be listed in the registry of importers and exporters at the Argentine Customs (Dirección General de Aduanas (DGA)). Argentina applies import duties and a range of indirect taxes on import and local transactions. Products imported for consumption are generally subject to import duties, statistical tax, value-added tax, excise duties and anticipated profits tax. As a member of the Southern Common Market (Mercosur) customs union, Argentina utilises the Mercosur Common Nomenclature (NCM) classification, which is consistent with the Harmonised System (HS) classification.
On 1 January 1995, Argentina, along with other Mercosur members (i.e. Brazil, Paraguay and Uruguay), implemented the Common External Tariff (CET). Most imports from non-Mercosur members are then subject to CET which ranges from zero to 35%. In December 2011, Mercosur authorised member countries to increase their MFN duties on 100 tariff lines to shield their industries from a flood of cheaper imported goods. The measure is expected to take effect in January 2012 and will remain in effect through 2014.
Apart from free trade agreements with a range of countries, including Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico and Peru under Mercosur, Argentina also provides certain duty breaks to members of the Latin American Integration Association (ALADI) for goods not covered under the aforementioned agreements.
In addition, Argentina applies minimum specific import duties (DIEMs) on a range of imports from all destinations apart from Mercosur countries. DIEMs are applied only when the duty that results from their application is greater than that resulting from ad valorem tariff. Products currently subject to DIEMs include textile, apparel, footwear and certain toys.
Argentina has two types of import licences – automatic and non-automatic. The LAPI (Licencia Automática de Importación) is a general system of automatic pre-importation licensing. Non-automatic licences apply to imports from all sources and must be obtained before the importation can take place. Argentina’s licensing requirements are very fluid in the sense that Argentinean authorities regularly include additional products or otherwise amend the existing provisions without much warning, placing a compliance burden on importers and foreign suppliers while contributing to import delays. A broad range of merchandise is currently subject to non-automatic import licences in Argentina, including apparel, yarns and fabrics, footwear, luggage and handbags, toys, certain household goods, auto parts, machinery and tools, bicycles and bicycle tires, certain paper and motorcycles, among others.
In August 2005, DGA established a system whereby imports of textiles, apparel, footwear and toys for consumption would be processed by certain “specialised” customs ports. Argentinean authorities argued at the time that this system was meant to, among other things, enhance effective customs oversight and reduce contraband activities and tax evasion. The range of products covered by this system was expanded on 24 August 2007 per Resolution 50/2007 to include such items as tableware and kitchenware, luggage and bags, leather apparel, glassware, imitation jewellery, certain appliances, tools, electrical machinery and equipment, certain automotive parts, bicycles, motorcycles, watches and lamps. In addition, the number of customs ports authorised to process textile and apparel merchandise was reduced from 13 to 11 while the number of ports authorised to process footwear was cut from eight to seven.
The DGA issued a resolution that, effective from 5 February 2010, amended the scope of products covered by this system and expanded the list of authorised ports. One of the most notable changes was the removal of HS Chapter 85 from the list and its replacement with headings 8508, 8509, 8510, 8516, 8519, 8521, 8523, 8527, 8528, 8531, 8536 and 8544, which has resulted in the elimination of a total of 34 four-digit headings under chapter 85 from the list. On the other hand, the DGA added to the list a large number of ports to the list, including seven new ports to process footwear and textiles and apparel, eight new ports to process tools and other items of HS chapters 82 and 83, and five new ports to process clocks and watches.
On the other hand, the DGA has established criterion values as a means of combating the under-invoicing of imports. Imports with a declared value lower than the criterion value require payment of a guarantee equivalent to the difference in duties to be paid on the declared value and the criterion value. Moreover, in instances where the declared FOB value of certain products is less than 80% of the criterion value established by the DGA, the advance VAT is assessed at a rate of 21% in the case of goods subject to a 21% VAT rate and 10.5% for goods subject to a 10.5% rate. The list of products subject to criterion values is frequently modified and applies to imports from a range of suppliers, including Hong Kong and the mainland. Recent modifications or amendments include the criterion values for for baby carriages, certain luggage, bags and other containers, and plastic tableware and kitchenware. An updated DGA list of current criterion values is available at http://www.afip.gob.ar/Aduana/valoracion/valores.criterios.pdf.
In November 2004, Argentina signed an agreement with China where it committed to grant market economy status to mainland China for purposes of anti-dumping (AD) and countervailing (CV) duty investigations. However, it appears that Argentina has not amended its legislation to treat China as a full market economy country. In fact, AD duty investigations of mainland Chinese products are still conducted in accordance with Decree 1219/2006, which sets forth investigative procedures for non-market economy and transition economy countries and requires the use of cost and pricing structures from a surrogate market economy country (for example, the recent AD investigations on mainland Chinese steel saw blades and certain apparel are being conducted with Brazil as the surrogate market economy country).
As of January 2012, Argentina imposed a number of AD measures on imports from the Chinese mainland, including bicycles, bicycle tyres, passenger car tyres, drinking glasses, electric irons, footwear, suits and jackets, measuring tapes, microwave ovens, air-conditioning equipment, electric fans, electric heating devices, playing cards, plastic syringes, food processors, denim fabric, certain polyester filament fabric, textured filament yarn of polyester, stainless steel cutlery, manual straight saw blades of high-speed steel and vacuum flasks with glass/stainless steel inners, along with a number of investigations and expiry or changed circumstances reviews involving, for example, certain ceramic flags and paving, electric motors, solid fumigant pesticides, coated paper, sunglasses and spectacles, and synthetic organic colouring matter. As of that date, Argentina did not apply any AD measures on imports from Hong Kong or CV measures on imports from both Hong Kong and the Chinese mainland.
There have been since the spring and early summer of 2009 troubling reports that Argentinean authorities are demanding that importers in a range of sectors export one dollar's worth of merchandise for every dollar's worth of merchandise they import into the country. While there is no evidence that the Argentinean government has published any official regulations to implement this policy, it appears that importers are being asked to voluntarily comply with this requirement. Although detailed information on this issue remains scarce, some of the sectors affected by this requirement seem to include toys, footwear, appliances and other household goods and food products.
Regarding product standards and regulations, all goods – domestic or imported – must be marked with the name and description of the product, the country of origin, the quality, purity or blending description, and the net weight on the label. In addition, there are separate labelling requirements for perishable goods, inflammables and other selected products. Since 1998, technical regulations governing safety and mandatory certification have been adopted in Argentina for electrical equipment, toys, footwear, gas appliances and products, construction steel, elevators and personal protective equipment, among others. According to the mandatory safety requirements, most electrical and electronic equipment that fall within the range of 50-1,000 volts AC or 50-1,500 volts DC, including household appliances, audio/video equipment, lighting fixtures and information technology equipment (e.g., printers, scanners, monitors, etc.) must bear the national certification mark, known as the “S” Mark, as well as the mark of the certification organisations that are accredited by the Argentine Accreditation Organisation.
Furthermore, Argentina also has specific labelling requirements for a range of products, regulated by various agencies. For instance, under Mercosur’s technical regulations establishing labelling requirements for textile and apparel products, subject merchandise will have to include the following information in a label, stamp, decal, print or similar means that is permanent, indelible, legible and clearly visible: (i) name or registered brand and tax identification of the domestic producer or importer; (ii) country of origin; (iii) fibre content (fibres accounting for less than 10% of the total may be listed as “other fibre(s)”); (iv) care labelling instructions; and (v) size or dimensions, as applicable. This information will have to be presented in the language of the country of consumption but could also be presented in another language(s).
On foreign exchanges control, the tax branch of the Argentinean government (Administración Federal de Ingresos Públicos – AFIP) recently issued a resolution (General Resolution 3210/2011) to tighten domestic controls on foreign exchange by requiring entities authorised to operate in the foreign exchange market to electronically report and seek AFIP approval for all foreign exchange transactions that are performed in Argentina, regardless of their objective or destination. Press reports also indicate that transactions that reach the maximum foreign exchange purchase amount of US$2 million, will be closely scrutinised by Argentinean authorities.
Free trade zones have been established in Argentina since 2004. However, most of them only carry out storage and service activities. So far, the only special free trade zone is located in Rio Grande, Province of Tierra del Fuego. Against the Free Trade Zone standing, imports of parts and components into Tierra del Fuego Free Trade Zone are free of import duties, while goods produced in the Free Trade Zone can be imported duty-free into the rest of the Argentine territory. By receiving the “Made in Argentina” origin qualification, goods produced in the Tierra del Fuego Free Trade Zone will also be granted a preference margin within Mercosur.
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